Arbitration is one of the methods of alternative dispute resolution (ADR) for settlement of differences outside the courts or public justice dispensing system through a private ADR neutral appointed by the parties themselves instead of judge or jury. Here the parties agree to abide by the decision to be rendered by such arbitrator or ADR neutral on the dispute.
The decision of the arbitrator can be appealed from on very limited grounds, unless the agreement between the parties provide otherwise. Often the arbitration agreement stipulates that the decision of the arbitrator shall be final and cannot be appealed from.
However, in case of ‘ non binding arbitration’ the parties have the option to reject the award of the arbitrator and proceed with litigation in courts of law.
Arbitration leads to quick and cost effective resolution of disputes. The added advantage is that arbitration maintains privacy and confidentiality.
The Federal Arbitration Act obliterates any state law that is inconsistent with its pro arbitration public policy or does not treat arbitration agreements or awards as sacrosanct. The aforesaid rule of preemption applies in both federal and state courts.
(More http://www.access.gpo.gov/uscode/title9/chapter1_.html )
However, under the doctrine of choice of law the parties may opt to conduct their arbitration under the appropriate state law.
